Whatever you want to accomplish, your approach is wrong.Thus I assume that you'll get the same results with any other browser you'd test with.

- If you type in the URL bar http://smarthome/cafe/boil the browser (with proxy enabled) will try to connect to that address.- If the proxy is disabled the browser can't connect to http://smarthome/cafe/boil since your hosts file is blocking this address by redirecting it to 127.0.0.1, your local machine where no proxy is listening anymore.

If you have a local network and you want to redirect to it from your hosts file than you'll have to try something like this: